Inward Worker Remittances and Economic Growth: The Case of Bangladesh

  • Md Ali Emam College of Economics and Management, Shanghai Ocean University, China
  • Tinggui Chen College of Economics and Management, Shanghai Ocean University, China
  • Markus Leibrecht College of Economics and Management, Shanghai Ocean University, China
Keywords: worker remittances, economic growth, Bangladesh, ARDL bounds testing

Abstract

It is commonly believed that for development economies, inward worker remittances are an important financial instrument to boost economic growth. This study investigates the relationship between inward worker remittances and economic growth for the case of Bangladesh. The study applies an Autoregressive Distributed Lags (ARDL) bounds testing approach based on 28 years of World Bank and IMF data. The paper adds to the literature by considering Foreign Direct Investment (FDI) and Official Development Aid as additional foreign sources of economic growth. In contrast to common belief and most prior results, the findings of this study indicate that worker remittances do not have a significant impact on economic growth. Rather, economic growth is mainly spurred by changes in Bangladesh’s capital stock and by FDI inflows. Thus, while worker remittances are certainly important for receiving families, their impact on economic growth needs to be enhanced by incentivizing a more growth-conducive use of remitted funds.

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Published
2021-07-31
How to Cite
Emam, M. A., Chen, T., & Leibrecht, M. (2021). Inward Worker Remittances and Economic Growth: The Case of Bangladesh. Applied Economics Journal, 28(2), 43-62. Retrieved from https://so01.tci-thaijo.org/index.php/AEJ/article/view/246679
Section
Research Articles